Avoiding Abuse

Mexican legislators were hesitant to model their country’s class action system after the one used in the U.S.

“A lot of groups in Mexico saw the efficiencies that collective actions might promise in certain kinds of cases, but they had heard a lot about class action abuse, particularly in the U.S.,” says Sean Wajert, a partner at Dechert.

Mexican legislators attempted to configure the final class action law in a way that would provide consumers with access to justice while still being fair to businesses.

For instance, the law features a modified loser-pays rule that could deter frivolous claims.

“The loser-pays provision is one of the mechanisms expected to control an overflow of class actions,” says Diego Gandolfo, a partner at Shook, Hardy & Bacon.

Experts say it isn’t likely that plaintiffs firms will immediately rush to file class actions once the law is in effect. They anticipate a few test cases first.